The Rachel Maddow Show, Transcript 01/05/12

RACHEL MADDOW, HOST: Good evening, Ed. I`m glad you just did that interview on Indiana. We`re going to do more about the big Indiana walkout by those Democrats today coming up this hour. Appreciate it, man.

SCHULTZ: It`s great. It`s a big story.

MADDOW: Really is. Thank you.

And thanks to you at home for staying with us for the next hour.

Some congratulations in order tonight for, of all people, Republican presidential candidate Jon Huntsman. Jon Huntsman, it appears, has finally made it.

Now that the Republican presidential race has moved on from Iowa, we are didn`t really compete, to New Hampshire, where he has been focusing, Governor Jon Huntsman`s public profile has finally, maybe at least, risen high enough for him to earn a starring role as the villain in a remarkable new anti-Jon Huntsman attack ad. Have you seen this today? I saw this at the website Wonkette.

The ad – now, it does not appear to be an official campaign ad. It appears to have been produced by Ron Paul supporters in New Hampshire. And it specifically zeros in on Jon Huntsman`s most recent job as U.S. ambassador to China. Watch.

(VIDEO CLIP PLAYS)

MADDOW: Jon Huntsman is secretly not only the Manchurian candidate but secretly actually Chairman Mao video. That is claimed by a group called NH, New Hampshire, Liberty for Paul.

Now, that group does not appear to be formally affiliated with the Ron Paul campaign by any way, shape, or form. And that may not be the most effective ad of all time.

For the Huntsman campaign, don`t you have to think it`s got to be a little exciting? I mean, to at least have somebody care enough to go after you at this point on anything, even if it is just morphing you into Chairman Mao and even if it is just somebody anonymous on the Internet, at least somebody`s paying attention to Jon Huntsman enough to insult him.

When Barack Obama appointed Jon Huntsman to be the U.S. ambassador to China in May 2009, I actually was in Utah in May 2009. I remember talking to people about that left, right, and center and everybody agreeing about what a smart move that was.

Jon Huntsman was so well respected as governor of Utah, it was seen as such a smart appointment. He was a high-profile, prestigious pick for that really important job. It was a bipartisan gesture by a president who had just been elected, saying he wanted to usher in a different tone in Washington, D.C.

And then once he got the job, Jon Huntsman, by pretty much all accounts, he turned out to be good at the job, as the ambassador to China.

Well, now two years later, two years after that appointment, now that Republicans are desperately looking for a conservative, experienced, electable alternative to Mitt Romney – hint, hint Jon Huntsman – and they are unable to see that Jon Huntsman really could be that alternative because they can`t get over the fact that huntsman did have that job technically in the Obama administration, now two years later President Obama giving Jon Huntsman that ambassadorship doesn`t just seem like a smart move. It kind of seems like a genius move. It effectively killed any chance that Mr. Huntsman had for rivaling Mr. Obama for the presidency.

But it wasn`t the only move like that that President Obama made early in his administration. It wasn`t the only bipartisan pick, not even the only high-profile bipartisan pick. Three months before President Obama nominated Jon Huntsman to go to China, you may remember this bipartisan scene at the White House.

(BEGIN VIDEO CLIP)

THEN-SENATOR JUDD GREGG (R), NEW HAMPSHIRE: Thank you very much, Mr. President. And thank you for taking this rather extraordinary step of asking me to join your administration as commerce secretary.

(END VIDEO CLIP)

MADDOW: That was Republican Senator Judd Gregg of New Hampshire being nominated for and accepting the nomination to be the nation`s secretary of commerce. Judd Gregg said that day that when the president of the United States calls on you to serve he said, quote, “It is your obligation.” in his words, “It was my obligation to say yes.” That`s what he said. And then nine days later, inexplicably, Judd Gregg changed his mind and he withdrew his nomination to be commerce secretary.

So, about that whole it`s my obligation to serve thing, I was just kidding.

His book “The Promise” about the Obama administration`s first year, here`s what Jonathan Alter wrote about how things went down. He said, quote, “Obama chose a bona fide conservative, Senator Judd Gregg, for an important economic post, commerce secretary.

And what happened? Instead of viewing the choice as a gesture of bipartisanship, Republicans hounded Gregg as a traitor until he dropped out of the cabinet. Quote, `This place is insane,` Obama told his friend Marty Nesbitt with a can-you-believe-it grin.”

Even though Judd Gregg is a conservative, the Judd Gregg appointment was not that strange a choice for the new president. President Obama did make bipartisan appointments. And especially given the reputation of what it means to be a New Hampshire Republican, you know, country above party, practical hard-nosed Yankee fiscal conservatism above all else, picking a New Hampshire Republican like Judd Gregg for an appointment like that made sense. It made sense at least under the old idea of what it means to be a New Hampshire Republican.

But Senator Gregg freaking out in public and then un-accepting the appointment that he had just accepted nine days earlier maybe should have been our first sign that what we think of as a New Hampshire Republican isn`t necessarily what a New Hampshire Republican is anymore. After his public freak-out on the cabinet secretary position, Senator Judd Gregg decided he would stay in the Senate just long enough to start voting against his own economic proposals. Apparently for the sheer reason that President Obama had said he liked them.

Then after he did that, Senator Gregg quit the Senate. He retired from the U.S. Senate. And since he had just repudiated his old positions because he quit, now that he`s gone, nobody really knows what he ever really believed. So much for Yankee hard-nosed fiscal conservatism.

The common wisdom about New Hampshire Republicans, about the role of New Hampshire Republicans in this year`s presidential nominating process is that they`re the sane ones, right?

If Iowa Republicans are sort of the out of the mainstream Republicans, a little bit kooky, at least the ones who turn out for the caucuses, they`re a little on the fringe, New Hampshire Republicans are supposed to be the reasonable ones. They`re the ones who should actually be seen as a real barometer of where Republicans stand across the country. That is the reputation.

If it was ever true, it is not true anymore.

When Republicans won up and down the ballot all across the country in the 2010 mid-terms, there were few places where their victories were as big as they were in New Hampshire. This is what the New Hampshire House of Representatives looked like before the 2010 midterm elections. Blue is Democrat. Red is Republican, right?

Democrats controlled the New Hampshire House by a margin of 216-173.

Here`s what the house looked like after that election. Look. Boing. Republicans flipped the New Hampshire House and they flipped it by a huge margin. They gained 124 seats.

That was basically the same story in the state Senate. Republicans went from being the minority in the senate to having their biggest majority there in nearly half a century.

So what have New Hampshire Republicans done with their big new majorities? They have taken a state with a national reputation for being sort of sane and within the mainstream among the Republican Party and they have decided to let their freak flag fly. They have tried stuff that Republicans are trying all over the country this year, stuff like stripping union rights and blocking people from voting unless they showed documentation that they`ve never had to show before and that not everybody has, but they have also gone for the exotic stuff.

Back in October, one of the new Republican state representatives chose to use his new seat in the House for Representatives there to call on the legislature to form a commission to bring charges of treason against President Obama.

Just a few weeks later, nine New Hampshire Republican legislators, not conservative activists but actual elected Republicans, joined with birther queen Orly Taitz trying to get Barack Obama`s name taken off the ballot this coming November.

Since, of course, he is secretly foreign and therefore secretly not really the United States president.

A few weeks after that, New Hampshire Republicans crafted a pair of bills aimed at rolling back the teaching of evolution in New Hampshire`s public schools.

Just this week, New Hampshire Republicans passed a bill to let every parent in New Hampshire opt their kid out of every specific lesson out of every specific class in public school and every school would have to accommodate every change by setting up an alternate lesson plan for every kid for every objection – a bill so weird and so extreme that the Republicans in the legislature couldn`t even get support from the state`s fairly radically conservative newspaper the “Union Leader.” The “Union Leader” called this thing, quote, “a simply awful bill that is neither workable nor sensible.”

And just when it seemed like New Hampshire Republicans could not quite distinguish themselves enough comes their latest effort. It is a bill that would mandate that any new law proposed in New Hampshire cite its origin, and it needs to cite its origin not in the U.S. Constitution but in the Magna Cart – the Magna Carta, the English Magna Carta of the year 1215.

Three Republican state lawmakers introduced a bill that will force state legislators to say where in the Magna Carta they get the right to propose any new given law for New Hampshire. The Magna Carta – the ancient list of feudal demands made of the king of England in the 13th century. That`s what New Hampshire Republicans want to guide the state`s lawmakers going forward.

Laws in the state of New Hampshire will have to be guided by passages like this one: “no man shall be forced to perform more service for a knight`s fee or other free holding of land than is due from it.” Or this one, “If anyone who has borrowed a sum of money from Jews dies before the debt has been repaid, his heirs shall pay no interest on the debt for so long as he remains underage, irrespective of whom he holds his lands.”

One of the bills Republican sponsors was asked about any legal hang-ups in requiring New Hampshire bills to derive their authority from something foreign, from an English charter. He responded, quote, “That`s an interesting thought.”

As he eyes of the nation turn to Republicans in New Hampshire right now, it is worth noting that Republicans in New Hampshire right now are sort of a hot mess. Earlier this year, the chairman of the New Hampshire Republican Party, Tea Party Republican guy, he was forced to resign over questions about his use of party funds.

In October, New Hampshire Republicans demanded that Republican presidential candidates boycott Nevada`s caucuses this year to save New Hampshire`s spot at the top of the nominating process.

When Mitt Romney would not agree to that despite New Hampshire Republicans` demands, organizers of that boycott decided to punish Mitt Romney by endorsing him anyway. New Hampshire Republicans have this national reputation for being the sane ones, for being the ones who have it together, at least compared to those crazy Republicans in Iowa.

But why exactly do they still have that reputation?

Joining us now is Steve Kornacki. He`s a political news editor at Salon.com.

Steve, thanks for joining us. Nice to have you here.

STEVE KORNACKI, SALON.COM: Yes, good to be here.

MADDOW: I know that you have been reporting in New Hampshire and that you have been watching the contest there, as we all have, toward the 2012 race. But do you think that the Republican reputation of what it means to be sort of a Yankee New Hampshire Republican matches the reality now?

KORNACKI: Not particularly. I mean, there is sort of – there are still actual moderates in New Hampshire, in the New Hampshire Republican Party, in a way there aren`t in a lot of other states. And I think another thing that`s significant about New Hampshire is there`s a very big independent electorate there. In more than most states, New England and the Northeast, it`s friendly to Republicans but it`s not that conservative.

But that said, the heart of the Republican Party in New Hampshire I think is very conservative. The difference between it – it`s a distinct form of conservatism. You know, there`s not this fusion of Tea Party conservatism and fundamentalist Christianity that you see in other states and I think really defines a lot of the Republican Party today. It`s more secular.

You know, in the primary next Tuesday, I think about 20 percent of the Republicans who vote will identify themselves as evangelical Christians. It was 60 in Iowa. It will be 60 in South Carolina.

But the conservatism that does exist in New Hampshire comes from two places, generally. If you look in the southern part of the state where it`s a lot of immigrants from Massachusetts, these are people who fled what they think of as tax-assachusetts. They are fanatically, adamantly anti-tax. And not just anti-tax, it just makes hostility to sort of all government programs, all government services. So, there`s that kind of conservatism.

And then outside of the sort of southern New Hampshire suburbs, you find this older sort of paleo-conservative, almost like Pat Buchanan-ish form of conservatism, sort of isolationist, a little paranoid in some ways, you know, worries about like world government, those sorts of things. You know, Pat Buchanan won New Hampshire in 1996 when he ran for president. That`s the heart of that.

So what happened when Obama became president is the conservatives in southern New Hampshire, the conservatives of the Buchanan, they really asserted themselves in the party and I think they intimated the Judd Gregg types basically into acquiescence.

MADDOW: I agree with you. And I spend a lot of time in New Hampshire because my partner Susan`s family lives there. So, I`m in and out of the state all the time and I`ve seem a lot of this stuff in action and I agree with you.

And then I look at what`s going on in organized Republican Party politics in New Hampshire and it seems like it`s a totally different strain than anything reflected by those things. I mean, where does the don`t teach evolution stuff come from out of that form of New Hampshire conservatism or the birther thing or the Magna Carta thing? Really?

The best – my favorite thing about that is the “Concord Monitor” interviewed one of the sponsors of this bill. Not only did one guy say oh, that`s a very interesting question when asked about citing foreign law, but another one was asked about things that were in the Magna Carta and after having proposed the legislation, he said, yes, I`ve got to bone up on that.

There`s this sort of what I think of as an ignoramus conservatism that I don`t recognize as a New Hampshire thing that has taken over in the New Hampshire legislature.

KORNACKI: Yes. And I think what that might get into is sort of the barrier between sort of the average sort of crazy person and entry into the actual political system in New Hampshire. It`s much lower there than anywhere else because the legislature has 435 representatives. The state has 1 million people. The ratio of legislator to individual citizen is microscopic. And you get some of these ballots.

You know, basically, they vote on those state legislative candidates in groups. So you might have like 11 in your district or something like that. So the average voter goes to the polls – think of last fall – the conservatives really organize themselves in the primaries, have these very conservative slates. Then the independents, who are friendly to Republicans and hostile to Obama came out, just wanting to vote Republican and vote against the Democrats, check off all 11 names.

Then six months later, we find out it`s the guy who`s obsessed with the Magna Carta but doesn`t know what it is.

MADDOW: I think that the New Hampshire conservative electorate is so much more diverse and – diverse and sort of heterodox than they are given for this year. I think that although probably Mitt Romney is going to win on Tuesday, it`s going to be a more fun night than we expect.

KORNACKI: I hope so.

MADDOW: I hope so too. Steve Kornacki, political news editor at Salon.com. Steve, it`s always good to have you here. Thanks a lot.

KORNACKI: Sure.

MADDOW: All right. Some actual good news coming up. I`m not being snarky. I`m not being sarcastic. It`s good news and it`s about you.

Also, we got Thomas Frank coming up and Barney Frank coming up. And no, they are not related.

That`s all ahead.

(COMMERCIAL BREAK)

MADDOW: Hey, microphones at press conferences sometimes pick up sounds from the audience, not just sounds from the featured speaker. This is what happened on a live microphone today at the Pentagon while reporters were waiting for President Obama to make his big announcement there. Listen.

(BEGIN VIDEO CLIP)

REPORTER: See this room? Two thirds of us laid off when Ron Paul is president.

(END VIDEO CLIP)

MADDOW: Reporter humor.

Before Ron Paul is president, President Obama laid out big plans on defense today. Congressman Barney Frank is here in studio to talk with us about that. That`s just ahead.

(COMMERCIAL BREAK)

MADDOW: Good news. Seriously.

Applications for unemployment were down again last week. Making the average over the past four weeks the lowest it has been in more than three years. Steve Benen at “Washington Monthly” made that into a pretty picture today. This is weekly new unemployment claims from 2007 to early 2009, right? So unemployment claims going up.

Then look what happened starting early in 2009. Around the time the stimulus money starts getting spent. Unemployment applications start going down. And they go down a lot. So, fewer and fewer people filing for unemployment.

Also, further signs of life. In manufacturing, the lost art of making stuff in America. Tomorrow`s jobs report is expected to show there were new manufacturing jobs in America this year for the second year in a row. The last time there were new jobs in manufacturing for even one year in America was 1997. Now, we`ve had that for two years in a row.

And further, further good news today from the American auto industry. Today, we learned that each of the big three Detroit automakers made gains in their overall share of the market last year. That`s the first time that`s happened since 1988.

Corporate profits have also been up lately. They have rebounded and then some from the Great Recession.

So there are these green shoots. There are signs of growth in the economy all over the place, including for corporations, which are not people.

In fact, check this out about how corporations, who are not people, check this out about how they are doing with all their record the recession never happened profits these days.

Look at what they`re paying in taxes on all those record profits. While corporate profits rose to a record of nearly $2 trillion in the third quarter of last year, the amount of money corporations paid in taxes on that still remarkably low. In fact, as of November, it`s $132 billion less than government projections for the amount of profit they are making.

So, again, here`s what corporate profits look like right now, right? They`re at a record high, nearly $2 trillion in a single quarter last year. And here`s what corporate tax payments look like right now.

Somehow corporations are making record level profits and they`re paying recession-level taxes. It must be nice.

What have corporations been doing with their windfall record profits and their low, low taxes? They have not been doing record hiring. Meanwhile, overall jobless claims are going down, which is a good thing.

The record corporate profit numbers have not been matched by record or even particularly brisk corporate hiring, because as corporate profits have risen over the past year, corporations have mostly just been hoarding that cash. They have not been spending it. They have not been putting it into the economy. They have mostly just been holding on to it.

So even as there are some signs of life, some signs of growth in this economy, given what`s going on, how is it that the one economic idea shared by all the Republican presidential contenders right now, the one idea they all say would be the magic ticket to us really getting back on track economically speaking, the one big idea would be lower corporate taxes. How would that help? How would that help right now?

I`m sure the view from an enormous pile of money is nicer than the view from just a very large pile of money. But still, actually, in the real world, how would that help, given what`s going on in our economy right now?

Joining us tonight for “The Interview” is a man who has just published his explanation of the intellectual miracle, the alternate universe that is conservative economic thought after the great recession.

Thomas Frank`s great new book is called “Pity the Billionaire.”

Mr. Frank, it`s great to have you here, sir. Congratulations on the book.

THOMAS FRANK, AUTHOR, “PITY THE BILLIONAIRE”: Thank you, Rachel. How are you today?

MADDOW: I`m good. I felt like when I was looking at all those sort of good news economic stories today, it keyed in for me to your thesis here. I mean, your book is about this remarkable revival of the right after the financial crash and how in empirical terms it really makes no sense. But we did get from this financial disaster to an era of right-wing economic fundamentalism.

How do you think that happened?

FRANK: Oh, my God. Isn`t that the great mystery? I mean, that`s what I`ve been wrestling with ever since I saw it beginning back at the very first Tea Party rallies back in 2009. When you come out of this – you know, this financial catastrophe brought on by, and almost every serious observer that`s looked at this agrees, brought on by decades of deregulation of the financial sector, you know, allowing all kinds of crazy predatory lending, mortgage origination, you know, these people writing these toxic investments and ripping one another off – all of this crazy stuff completely unsupervised.

And then you have a political movement that rises up and is in fact triumphant in so many parts of America claiming that you know, all we`ve got to do is get government out of the way and deregulate some more. You know?

And you look at virtually every Republican candidate, and now they move their circus to New Hampshire and that`s what they`re demanding. You`ve got to get government out of the picture. You know, you`ve got to unleash Wall Street, by God.

It`s an amazing – it`s an amazing turnabout.

You know, look, Rachel, I have never seen in my life, and I doubt I`ll ever see it again, an ideology more directly discredited than the whole, you know, laissez-faire thing was. The whole deregulatory push was by the financial crisis in 2008. And yet, it`s back as though it never happened.

MADDOW: Well, and you write about, though, it seems like the key you`re able to find to how Republicans were able to push something that was the exact opposite of what circumstances would seem to warrant they should push. The sort of the key that you find is essentially that they were willing to do it, that they were willing to make a case for it, that they were willing to be activist good it, to be coherent and to speak with conviction and say, no, no, no, it`s deregulation that we need. I know, I know, I know, it`s just – trust me, it`s deregulation.

And by being so vehement and internally coherent about it, it just seemed like it was basic and made sense and so people latched on to it.

Is it almost like a psychological argument that you`re making that we need to hear simple truths?

FRANK: It is in some ways. But I wasn`t going to go there just yet because it`s more than that. It`s a kind of utopianism, you know?

It`s what they decided, and they decided this very on, with the very beginnings of the right-wing revival, is that the main, you know, problem -- you and I can sit here and say, we`ve been engaged in, you know, conservative politics in this country for 30, you know, maybe 40 years, and whether the same is true in basically every other western country, privatizing, deregulating, de-unionizing, you know, outsourcing, all of this sort of thing, but their answer to that is uh-uh, we just haven`t gone far enough and we`ll never – you know, we`ll never be prosperous again until the day we deregulate all the way and we privatize everything.

And until then you can`t say that laissez-faire – you know, or that the free market has been discredited because we haven`t been allowed to do every last little thing that we want.

You know, and what`s weird, Rachel, this worked. This argument worked. This argument was successful.

And yes, there`s a psychological element to it. It`s called the social construction of reality. And you see it in a lot of these kind of utopian movements throughout history but you especially see it with our friends in the Tea Party. It looks like you see it in New Hampshire –

MADDOW: Well, exactly. But that`s sort of where I was going to go with this, is I feel like your thesis absolutely has helped me understand what happened in 2010 and how the simplistic, incredible but simplistic and vehement argument that sounds simple and effective repeated loudly can work and can move people toward something especially when they`re scared.

But I wonder if you feel like your marveling at the success of this movement on the right, is it all damaged by the field of presidential candidates for 2012? They do not seem poised to do as well in 2012 as they were in 2010, and in fact, they`re having a hard time even mounting kind of a credible slate of candidates, aren`t they?

FRANK: Well, you know, it looks like it. But I wouldn`t write them off. I mean, this is a mistake that so many of my pundit friends made back in 2008.

Remember, after the crash itself, when pundits just across the board were saying, first of all, conservatism is dead, laissez-faire has had its moment, deregulation is over. And that furthermore, the Republican Party has to either moderate itself or basically face irrelevance for a generation.

And, you know, what did the Republicans do? Did they move to their moderate wing? No, they purged those guys and they went the opposite direction. You know, they sailed as hard as they could to the right and had this, you know, fantastic victory in 2010. And so when you – you know, when you achieve success by doing that, of course they`re going to continue to do something like that.

And I would not write these guys off. Remember, Rachel, they have – you know, as silly as they seem, and I admit, Rick Santorum? I`m just like watching this, my mouth agape. I cannot believe it.

But this is a party that`s well-organized, extremely well-funded. They have a powerful infrastructure. They`re able to bounce back from the most incredible defeat.

Just two years ago, all those scandals in the Bush administration, the delay Congress. Oh, my God. I would not write them off.

Although I will say this, the debt ceiling showdown was a huge black eye for these people. I mean – and in Wisconsin, what, you know, electing Scott Walker, that sort of thing.

MADDOW: Thomas Frank, columnist for “Harper`s” magazine and author of the very good new book, “Pity the Billionaire” – thank you for writing this book. It`s a great read like everything you write, and I appreciate the chance to talk to you about it tonight. Thanks.

FRANK: Well, thank you, Rachel.

All right. President Obama had never held a press conference at the Pentagon until today. I will have the details about a big shake-up in American military priorities with the man who has been calling for that shake-up for a very long time, Massachusetts Congressman Barney, just ahead.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, FORMER U.S. PRESIDENT: If we`re an arrogant nation, they`ll resent us.

If we don`t stop extending our troops all around the world, in nation-building missions, then we`re going to have a serious problem coming down the road. And I`m going to prevent that.

I don`t think our troops ought to be used for what`s called nation-building.

(END VIDEO CLIP)

MADDOW: Yes, then he got elected.

George W. Bush ran for president in the year 2000 as Ron Paul. Not really, but kind of, on national security. He talked about a humble American foreign policy.

He posited that the Clinton administration had used the military way too much. He said that as president, he would use the military less. He certainly wouldn`t allow the U.S. military to be used for nation building. He said that over and over again.

Then after 9/11, as president, George W. Bush launched two massive ground wars in the Middle East and Central Asia, overthrowing governments that, whatever their sins, had not launched the 9/11 attacks. After overthrowing those governments in Iraq and Afghanistan, the Bush administration decided to stay in those countries, setting up a large-scale, long-term multitrillion-dollar U.S. military presence in both of those countries to try to set up and prop up new governments there, indefinitely. We were remaking those countries and remaking the world.

It would take a new president from the opposing party to come in after those eight big neo-conservative years to finally end one of the Bush administration wars and to start the end – start ton end the other. And it should be noted to finally get the guy whose al Qaeda organization actually did attack us on 9/11.

Well, today, that president, President Obama, went to the Pentagon, I think the first time a president has ever held a news conference at the Pentagon, and he announced there a new overall national plan for defense – reducing the size of the military not back to where it was before the Iraq and Afghanistan wars but back toward that. Reducing the defense budget not back to where it was before the Iraq and Afghanistan wars but at least to start to slow that budget`s extortionate growth.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Over the past 10 years, since 9/11, our defense budget grew at an extraordinary pace. Over the next 10 years, the growth in the defense budget will slow, but the fact of the matter is this – it will still grow, because we have global responsibilities that demand our leadership. In fact, the defense budget will still be larger than it was towards the end of the Bush administration.

And I firmly believe, and I think the American people understand that we can keep our military strong and our nation secure with a defense budget that continues to be larger than roughly the next 10 countries combined.

(END VIDEO CLIP)

MADDOW: This new plan the president announced today at the Pentagon also entails what I think is an important demotion – a demotion for the radical and elegant idea of counterinsurgency, an idea that was wholeheartedly adopted during the Bush wars, this maximalist idea that U.S. military force is something so broad-based, so permanent, so infinitely resourced, so omnipotent that its goal could be the stabilization of whole foreign societies, it could establish trust in government and justice and education and utilities and local government and national government, policing, everything.

It is a fantastic theory. But I mean the word “fantastic” literally here. Counterinsurgency does not hesitate to call for hundreds of thousands of soldiers being deployed abroad for decades. Seriously, for decades, plural. It is the kind of thing a country might decide to do if we had infinite resources and if we really did love the idea of nation-building in other nations.

If the new plan announced – in the new plan announced today, counterinsurgency, which became doctrine of the U.S. Army under George W. Bush, counterinsurgency under this new plan is busted down to ninth place on the new list of U.S. military priorities. Large-scale prolonged stability operations are explicitly ruled out in this new plan. Ruled out. No more Iraqs. No more Afghanistans. At least no more Afghanistans after this current Afghanistan that we`re still in.

The grand remake the world neocon wizard vision of the past 10 years, what George W. Bush explicitly did not run on but then brought us as president, as of today that experiment is over. It has finally been declared dead.

For several years, Congressman Barney Frank has championed changes like the ones announced today. He joins us here in studio next.

(COMMERCIAL BREAK)

MADDOW: Joining us now here in studio is Congressman Barney Frank of Massachusetts. He has been one of the loudest and most persistent voices in Congress, calling for big reductions in military spending and is the first person I wanted to speak to today after I heard President Obama`s announcement. Thanks for being here.

REP. BARNEY FRANK (D), MASSACHUSETTS: Thank you, Rachel. And thank you for doing such a good job on this particular issue.

MADDOW: Do you feel like the president`s announcement today of this new defense plan is a significant change in course or is this a tweak?

FRANK: No, it`s a significant change in course. It doesn`t go far enough. And I was sorry to see him almost boast about the fact that his budget`s going to be bigger than Bush`s. But it is a very significant change.

First of all, the fact that the military budget is being appropriately identified as one of the causes of the deficit is a big breakthrough. I mean, you can go back and do a content search. And I`ve been on this for a long time.

You know, I told you so today. One of the great lies people say is oh, I don`t like to say I told you so. Everybody likes to say I told you so. And I have found it to be one of the few pleasure that`s improves with age.

So I get better at it as I get older. And there aren`t many things about which that`s true.

But the fact that we`ve got it on the table, and I give some credit to Erskine Bowles and Alan Simpson. And I talked to them beforehand. Secondly, you made a very good point by talking about no longer long-term stability.

The dollar number is secondary to the goals you set yourself. If you were going to set for America very broad range of goals in which we have to we have to run the world to make it better, you`re going to have to spend more. And if you then try to cut back people say – well, you`re putting the military in a bad position because you`re telling them to do this and you`re not giving them the resources. We have to pull back on this overreach.

And there`s one principle I would hope we could adopt, and it`s really implicit in the very good comments you were making about building societies, et cetera. We have a wonderful military. They are extraordinarily able people. They are dedicated. They are well-equipped.

And they are very good at doing what a military can do, and that is to stop bad things from happening. But militaries are not the place you go when you want good things to happen. Militaries stop bad things. They don`t start up good things or bring on good things, particularly in foreign societies.

I mean, I`m sorry that the Shia and the Sunni and the Kurds are fighting. But 25-year-old heavily armed Americans are not the answer to that.

So the president took some steps forward, But not far enough. And I think it`s important for a lot of us to continue to press – for instance, he said we`ll be secure if we spend more than the next 10 countries in the world combined.

I`m going to be radical. I`d feel securer if we were spending more than the next seven combined. I`d knock off the last three. I bet you that would save us $15 billion a year.

MADDOW: The thing that I have always felt like was the structural issue about why the defense budget didn`t get down – go down, is that defense dollars were seen as dollars that somehow magically didn`t compete with other dollars for American priorities.

Do you think that Erskine Bowles and Alan Simpson and the sort of arguments that have been had about fiscal responsibility in Washington in the last couple years, has that changed?

FRANK: Without question. If you and I were just talking before, and you mentioned the trigger, the sequester. One of the good things that happened this year, and again, you and I have discussed this, the right wing has had an advantage in the debates up until now because they were ready to let everything blow up.

You know, in the story of King Solomon and the baby, the woman who was not the mother had a kind of bargaining advantage. She was willing to see the baby get cut in half. It was the real mother who had to give in and say, no, no, don`t cut the baby in half, I`ll give it up.

Well, the right wing has been willing to cut the baby in half, the baby being government. They were willing to macerate it and we sometimes had to give in. But through a number of things, and the administration said they were thinking about this, I`ll give them some credit for it. If nothing happens this year everybody`s taxes go up, not just the rich, because the Bush tax cuts expire in their entirety, and there are cuts across the board, except the administration did exempt Social Security, Medicare, and programs for poor people.

Now, there will still be cuts in the environment and transportation I don`t want to see. But the military will be cut bad. So that now makes it clear to people, it`s a zero sum game. When the issue was should we cut the military or not, I wasn`t doing very well. But we kept emphasizing.

And as the deficit issue became an issue, exactly what you said. The military is competing with everybody else. And in that competition I think they`re going to lose.

One last example, in Massachusetts, defense contractors who are present in our state, we have a good high-tech base, were getting articles in the “Boston Globe” about how this is going to hurt Massachusetts. The military budget was cut.

And I wrote an op-ed making the I think incontestable point if you hit Medicare we get it worse because we are a center for medical education, for medical treatment, for medical instruments. So that is exactly right. It`s the zero-sumness.

The other point about it is this – we`re not good at it. Look, if we could go into Iraq or Afghanistan or other places and make them the kind of democratic, open societies with equal rights, I would feel conflicted without saying let`s not try. But it`s impossible to send the most well-trained, heavily-armed young people with the best weaponry into a society they don`t know anything about and transform it in a good way. Again, you stop bad things. You can`t make good things happen.

MADDOW: Yes, and if you decide to stay for the fifth, sixth, seventh, eighth year –

FRANK: President Obama is now withdrawing from Iraq. As George Bush originally said he would. And the president was shaky about that, but he`s doing the right thing.

He`s now getting attacked by the right wing, by John McCain, by Mitt Romney because, well, how can you get – we can`t withdraw, the Iraqis still don`t get along with each other. That is exactly a recipe for what you said, decades long. This notion that we will stay in any country or in several countries until their politics improves despite the fact that they`re no threat to us or anybody else is a recipe for, A, futility and, B, bankruptcy.

MADDOW: Congressman Barney Frank of Massachusetts – I get to see new person to rarely. It`s really nice to have you.

FRANK: Thank you, Rachel. It`s nice to be here.

MADDOW: Thanks.

All right. Right after the show on THE LAST WORD, Lawrence O`Donnell`s guest will be the newly sworn in director of the Consumer Financial Protection Bureau, Richard Cordray. That is the definition of recommended viewing. You should watch that.

MADDOW: This is Lucas Oil Stadium in Indianapolis. Holds up to 70,000 people for big events and Sunday, February 5th, a month from today, the biggest event, the Super Bowl will be played there.

And if my secret boyfriend, Aaron Hernandez, scores a touchdown, beer on me, everybody. I`m getting ahead of myself with the Patriots but no matter what uniforms, or what team`s names on them are worn on that Sunday, the stars of Super Bowl Sunday will be union members. Every pro-football player is a member of the NFL Players Association, which is a union that collectively bargains for wages and benefits and better working conditions for the players. It is great for the state of Indiana that they get to host the Super Bowl this year. It`s also a bit of bad timing for them since Indiana state government is controlled by Republicans right now.

And here`s why that`s a problem. Last year Wisconsin`s fight over Republican stripping union rights in that state erupted right after the Super Bowl, which happened to be won by Wisconsin`s own Green Bay Packers. Guess who the heroes of that Super Bowl supported in that big Wisconsin fight.

Quote, “The NFL Players Association will always support efforts protecting a workers right to join a union and collectively bargain. Today, the NFLPA stands in solidarity with its organized labor brothers and sisters in Wisconsin.”

To have Wisconsin`s football heroes take the protesters` side had to be embarrassing for Wisconsin Republicans, right? Two of whom were later fired from their jobs as senators in that state by the people of their home districts. Thanks to recall elections.

Another Wisconsin Republican, Governor Scott Walker is facing the same possibility this year. With much less of the national fanfare that accompanied the big protest in Wisconsin, Democrats in Indiana`s legislature did exactly the last thing as Wisconsin legislatures did to spark the protests in the streets of their state.

Indiana Democrats up and left the state for weeks to block the Republican-held legislature from moving ahead with their union-stripping plans. In Wisconsin, the Republicans forced the union-stripping thing through any way.

But in Indiana, the Democrats who fled the state, they won. Now, it is starting up all over again in Indiana. Yesterday, it was supposed to be the first session of the Indiana state legislature for the year. Item one on the agenda of Republican Governor Mitch Daniels and the Republicans in the legislature is that same union right-stripping that Democrats stopped them from getting at last year.

Republicans argued that if they use state law to kill unions, if they institute a so-called right to work law in Indiana, that will attract business to Indiana, particularly business that will bring manufacturing jobs. If only Indiana had at right to work law, they say, if only Indiana had a right to work law to kill unions, then they could create jobs.

Here`s a chart on the Economic Policy Institute on growth and manufacturing jobs between 2009 and 2011 for Indiana, which hasn`t had these right to work laws and for the Midwestern states that do. Indiana`s the one other there on the right that`s really tall and tall is good in this case.

And this chart shows net manufacturing job losses by state since 1994. The lighter bars are right to work states, states that killed union rights. The darker ones are states without right to work laws, states that preserve union rights. It is hard to argue looking at this, that right to work laws are magic ticket to ensuring against job flight.

What you can effectively argue, what you can see from the data is that one thing right to work states have is bad pay, low wages – lower wages and right to work states are on average 3.2 percent lower than in the states that don`t have right to work laws.

So, that`s what Republicans want for Indiana. Not holding on to jobs. Not gaining jobs. But if you do have a job, let`s shrinky-dink your paychecks. That`s what Indiana Republicans are trying to do right now, again. And that`s why Democratic lawmakers in Indiana are fighting this fight again.

And again, at least so far, it is without much national fanfare. Democrats in the Indiana House who are outnumbered 60 to 40, they refuse to appear on the House floor yesterday or today, denying the Republicans the 67-member quorum they need to get going on this plan to kill union rights and to shrinky-dink Indiana paychecks.

Already, Republicans` efforts to block protests at the statehouse have been walked back. They have capped the number of people they said they`d allow at the capitol. They blocked those elevators and stairwells from the public. They banned cameras and recording devices. They planned all of these restrictions to keep people from protesting the union stripping law the way they did the last time.

At the last minute today, Governor Mitch Daniels caved and withdrew those new rules. Democrats say they want hearings all over the state. They want a slower time frame so Indiana understands what killing union rights would do to their state.

Republicans want to fast track it. They want it to go as fast as possible, please, in the hope that the matter can be settled very soon, really soon like maybe before February 5th soon.

The Indianapolis Colts have the worst record in football this year. They were so bad that people who usually hate them rooted for them this year out of a feeling for mercy. That is a bad way to get national attention. That Indianapolis is hosting the Super Bowl a month from today is weird enough given the Colts` bad session this year.

But if that Indianapolis Super Bowl is the site of a massive in the streets Indiana union rights protest this year, then mercy schmercy for Indiana Republicans. America`s most celebrated union members and a whole lot of national media are coming to town. What do you have to say for yourself?

This fight is just beginning again Indiana. We`ll keep you posted, especially if it involves Aaron Hernandez.

(COMMERCIAL BREAK)

MADDOW: We`re going to be live from New Hampshire tomorrow. I`m hoping to get at least one candidate other than the delightful Buddy Roemer to speak with me. Talk to me, Jon Huntsman. New Hampshire tomorrow.

Now, it`s time for “THE LAST WORD” with Lawrence O`Donnell. Have a great night.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.END

Copyright 2012 CQ-Roll Call, Inc. All materials herein are protected by United States copyright law and may not be reproduced, distributed, transmitted, displayed, published or broadcast without the prior written permission of CQ-Roll Call. You may not alter or remove any trademark, copyright or other notice from copies of the content.>